Swiss Re swings to higher-than-expected profit

AnitaGreil

ZURICH -(MarketWatch)- Swiss Re (SREN.VX) Friday reported much better-than-expected earnings for the first quarter, driven by an increase in premiums and a good result from investments, marking a strong turn around from the year-earlier period when earnings were hit badly by a series of natural disasters, such as a devastating tsunami in Japan.

The Zurich-based reinsurer said it swung to a $1.14 billion net profit in the quarter ended March 31, from a $665 million loss a year earlier when it faced big claims from a host of natural catastrophes, and above the $587.3 million forecast by analysts. Net earned premiums rose 22% to $6.2 billion from $5.1 billion, driven by successful renewals of contracts with clients.

The combined ratio--an industry yardstick measuring costs and claims as a proportion of premiums--was 84.9%, down from 163.7% in the first quarter of 2011. Any ratio above 100% signals that the underwriting business is unprofitable.

Swiss Re shares closed at 57.85 Thursday. The stock has gained more than 27% in value so far this year, outperforming the sector average, which is up 11% as measured by the Stoxx Europe 600 insurance index.

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